The pace of economic growth in Scotland has picked up after a slow start to the year though exports have continued to slide, according to a new report from Bank of Scotland.

The latest Bank of Scotland Business Monitor survey for the three months to the end of May suggests the net balance of firms surveyed reporting an increase in turnover was +7 per cent, up from a zero score the previous quarter but well down on the +28 score recorded for the same period last year.

Donald MacRae, chief economist at Bank of Scotland, said: “Expectations remain close to pre-recession levels suggesting that growth will pick up in the second quarter of the year.”

Bank of Scotland said more than a third of firms reported increased turnover while almost the same proportion broke even in the three months to May.

The bank said this was a “welcome reversal of the negative trend identified in the previous six months”.

However, the report also points to a sharp fall in exports to the eurozone countries.

Export activity was scored at -24 per cent compared with +6 per cent in the previous quarter and +14 per cent for the same quarter a year ago.

Bank of Scotland said: “Exporting to Eurozone economies should become easier as growth picks up in many of the currency bloc’s member countries but is being hampered as the rise of sterling against the Euro as Quantitative Easing (QE) takes effect.”

The banks report suggests the net balance of turnover from the production sector was -2 per cent for the three months to the end of May, which was an improvement on the -4 per cent the previous quarter though well down on the +25 per cent score recorded for the same quarter a year ago.

Net balance of turnover from service sector firms scored +14 per cent for the quarter, up from +4 per cent the previous quarter but down on the +29 per cent reported for the same quarter one year ago.

Bank of Scotland said volumes of repeat business were “virtually unchanged” in the three months to the end of May for an overall net balance score of zero per cent compared with +1 per cent the prior quarter though down markedly on the +25 per cent score recorded for the same quarter a year ago.

Firms surveyed were also asked to assess their prospects for the next six months, and the bank notes despite the “poor experience at the start of this year, expectations have improved and are close to the high levels evident pre-recession.

The bank adds: “This is the tenth successive Business Monitor showing a positive net balance for turnover expectations.”

Expectations for turnover in the next six months to the end of November suggest an overall net balance of +22 per cent, up from the +14 per cent reported in the previous quarter but well down on the +36 per cent score recorded for the same period a year ago.

Bank of Scotland said: “ Whilst 46 per cent expect turnover to be static in the next six months, 38 per cent expect turnover to increase against 16 per cent who expect a decrease.

“Service firms are much more optimistic than production firms, with service firms showing an overall net balance for turnover for the next six months at +27 per cent compared to +14 per cent for production firms.

“The latest net balance for expected export activity for the next six months has fallen.

“The net balance reached -6 per cent - down on the +2 per cent of last quarter and the +23 per cent of the same quarter one year ago.

“ An increase in uncertainty, a slowing world economy and a rising pound sterling have taken their toll of firms’ assessment of export prospects.”